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Shops Focus on Service to Better Compete

HATTIESBURG, MS—Internet sales are the largest challenge to brick-and-mortar shops. And many shop owners respond by doing what they do best: face-to-face communication with customers.

Shops point out they can’t compete on price, they charge sales tax, they pay pricey shop leases, and employee-to-customer ratios are skewed to their disadvantage.

But it’s more than that. Selling at low margins to anonymous customers is not all that appealing to them.

“I guess I just prefer dealing with my customers face to face. I have no interest in putting stuff in a box and shipping it off,” said James Moore, owner of Moore’s Bike Shop in Hattiesburg, Mississippi. “Plus, I could never hope to compete because of the economies of scale.”

Moore quips his customers are aware that the shop doesn’t discount to match price. And he will quickly drop products sold cheaper through other channels.

His shop recently dropped a rack brand when it showed up at Wal-Mart, and it dropped Polar bottles when they appeared at Walgreens and Academy Sports for cheaper than he could get them from his distributors.

When customers bring in Internet bikes for assembly, the shop charges $150 to $250 to finish the job.

“Many customers understand our high level of assembly and will drop off a bike in a box for assembly. We will not simply mount a handlebar; everything coming out of this shop is up to our standards. Some balk at the cost and go elsewhere,” he said.

Jeff Bailey, owner of Bikesport in Houston, Texas, doesn’t downplay the impact of Internet retailing when he notes that he felt the same way when mail-order retail took off in the ’80s.

“We just are not going to beat anyone on price, and that is not the business I want,” Bailey said. “I had two Internet bikes come in this morning in boxes that needed handlebars mounted. They wanted to wait while we did the work, but I told them I had 70 people in front of them in the service line so they could pick them up tomorrow.”

Bailey, like other retailers who choose not to push Internet sales, works to make sure his product mix is different from what shops are selling nearby, and from what is selling online. And he focuses on giving walk-in customers high levels of service.

“What retailers don’t like to admit is what a pain in the ass it is to keep an Internet site running,” said David Bell, owner of Mellow Velo in Santa Fe, New Mexico.

Bell started an online business selling fixie parts in 2005, when he opened his shop. The online business grew quickly, eclipsing his in-store sales. But when fixie Internet retailers proliferated, he closed down the business.

“Once it becomes a commodity, you are no longer selling bike parts but competing on advertising, getting your site to climb high on Google searches and cutting margins. I’m into biking, not that tech stuff,” he said.

And Bell notes that between his rental and guiding business and unique product mix at the store, he is more than happy with his situation. “I don’t need to grow 20 percent a year to be successful. I’ve got a great business here,” he said.

A smaller group of shops respond to Internet competition by jumping into it with both feet. For example, Carver Bikes is Bikeman.com, Speedgoat Bicycles is Speedgoat.com, Cambria Bicycle Outfitter is Cambriabike.com, and there are Nytro, Harris Cycle, Lickton’s, Cove Bike Shop—the list goes on.

Scott Linderman founded Tree Fort Bikes in Ypsilanti, Michigan, with Craig Anteau in 2003. It started as a mountain bike shop, since that was what Linderman and Anteau liked to ride.

But Linderman is a web programmer and Anteau was a regional manager for Kmart’s sporting goods department, so they had the genetic makeup to go toe to toe with Internet retailers.

“We had customers bringing in Performance and Jenson catalogs into the store asking for price matching. And we said to ourselves, ‘We can do that,’ ” said Anteau, Tree Fort’s vice president.

Two years after opening their shop they began to slowly build their web presence. Because they were doing all the web programming in-house, their presence grew slowly. “First it was more of a service for our local customers, allowing them to order in the middle of the night if they wanted and pick up their order in the store the next day,” Anteau said.

They also realized they couldn’t compete with large Internet retailers, so their product mix was as unique as they could make it. And it was not long before Internet sales eclipsed their in-store business.

“The shop is still an important part of our business, but Internet and brick-and-mortar retailing are very different businesses, though service is very important to both,” Anteau said.

“Surprisingly, price is not as important to Internet sales as some think. We sell everything at suggested retail online, except closeout goods. Our online customers either cannot get what they want locally or cannot get component information they need at their local shop, so they buy from us,” he added.